The Senate Banking Subcommittee on Financial institutions and Consumer Protection today held a hearing on bankruptcy reform to increase the chances of orderly failure at the largest financial-services companies, and perhaps also of repealing Dodd-Frank’s orderly-liquidation authority (OLA) backstop to the Bankruptcy Code. The witnesses went through three rounds of questioning on legislation introduced by Subcommittee Chair Toomey (R-PA) and Judiciary Subcommittee on the Constitution Chair Cornyn (R-TX) (see FSM Report RESOLVE24). The bill would add a Chapter 14 to the Code to allow financial institutions to utilize the FDIC’s single-point-of-entry approach in bankruptcy and, in freestanding legislation, also repeal OLA. This approach differs from pending House legislation which, while similar, adds a subsection V to Chapter 11 of the Code and does not repeal OLA.
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